Payment for a product or a service is often made in an electronic manner. For example, the payment may be made using a credit or charge card and a financial institution such as a bank may initiate transfer of the payment, either directly or via one or more intermediary institutions, to an account of a payee after a payer has authorised the transfer. Authorisation of the transfer may, for example, involve providing the payee with the credit card or charge card and signing an invoice. The payee then compares the payer's signatures on the invoice with the signature on the card and if he is satisfied he accepts the authorisation of the payment.
Various other methods have been proposed to have the payer “sign” the transaction to verify a payment, including, for example, using a security pin number.
However, there are still substantial security risks that need to be considered. For example, payment using a credit or charge card usually requires to give the card to the payee for a short period of time until the invoice is issued and signed. Magnetic strip cards are easily copied on relatively inexpensive equipment and the copied cards may be used for fraudulent transactions. Electronic payment systems that involve the Internet have related security problems. There is a general need for a payment system that offers improved security and convenience.
Further, the general paradigm conventionally associated with processing payment transactions is that the transaction processing communications (messages including payment information, such as account ID of payer, merchant ID, transaction amount, etc.) are processed between the payee or merchant device and a transaction processing system (usually a transaction acquirer and one or more issuing banks). The payer has little to do with the transaction processing other than to provide their account details (which, as discussed above, are then open to being obtained for fraudulent use). No one has suggested an alternative system to the conventional merchant device/transaction processing system arrangement.